Video description

In which John Green discusses the insane story of how the United States of America ended up subsidizing the cotton industry in Brazil so that America could continue its own illegal subsidies of its cotton farmers. This year and every year until we end our illegal cotton subsidies, the U.S. federal government will pay $147 million of American tax dollars to Brazilian cotton farmers to make up for our illegal subsidies, which amount to more than $3 billion most years.

There's no question that American cotton subsidies create jobs, but there's ample evidence that the same $3 billion could be used to create MORE jobs, either through more efficient direct government stimulus or through just not spending that $3 billion and allowing private industry to create jobs with that 3 billion in capital. This is (one of the reasons) why economists generally hate industry-specific subsidies.

Categories

Credits

Good morning, Hank, it's Monday. I love Brazil! Did you know that Brazilian Nerdfighters petitioned Brazilian publishers to publish LOOKING FOR ALASKA in Portuguese and it totally worked?

God, I love Brazil. Hank, today I want to tell you about Brazil and the United States that I first heard on the amazing podcast "Planet Money" -- there's a link to that below -- But I also have to do some errands today so ... walk with me.

(cuts to John walking down a snow-covered street)
So, Hank, this tee-shirt -- and yes, I'm wearing my face on my torso -- is made from 100% American cotton, like almost all cotton tee-shirts in the world. Why? Because the United States massively subsidizes its cotton industry.

Alright I've gotta get a water filter for my fridge. Let's drive.

(cuts to John driving his car, wearing his seat belt of course!)
The U.S. spends more than three billion dollars a year on its cotton subsidy, which has the effect of making the price of American cotton artificially cheap. That's a bit of an over-simplification, but in my defense, I'm currently driving on snow.

Right, so these cotton subsidies don't just make American cotton cheap in America, they make American cotton cheap everywhere, which is why the U.S. is by far the world's largest exporter of cotton. That's great for the American cotton farmer, but it kinda sucks for all the non-American cotton farmers. It also sucks for those of us who are Americans who aren't cotton farmers, because all we get for that 3.1 billion dollars in taxes is, like, slightly cheaper tee-shirts.

(cuts to a shot of McDonald's sign)
Must resist urge to eat cheeseburgers!

(cuts back to John in the driver's seat)
So, Hank, under international trade agreements, some agricultural subsidies are legal, but you're not allowed to artificially lower the price of something; and in 2002 Brazil filed a case with the W.T.O. saying basically, when it comes to cotton,

(cuts to a drawing of Brazil with a speech bubble saying:)
Americans are a bunch of cheating cheaters of cheatery.

(cuts to John outside Lowe's, walking through the parking lot)
And their illegal cotton subsidies have made it completely impossible for Brazilian farmers to compete, even to sell cotton IN BRAZIL, because American cotton is so artificially cheap.

In 2004 the W.T.O. sides with Brazil, says American cotton farming subsidies are completely illegal. Whereupon the United States says, "We're rubber, you're glue; W.T.O. rulings bounce off us and stick to you."

(cuts to a shot of the price label for refrigerator filter cartridges)
Holy snood! Adulthood is expensive.

(cuts back to John, walking through the aisles at Lowe's)
We completely refuse to comply, just keep appealing, and appealing, and finally in 2008 we lose our last appeal, whereupon we're like, "Ya know what? Nah, we're not gonna comply."

(cuts to John in the parking lot again)
Which we can totally do because it turns out there's no actual penalty for failing to follow trade agreements. We gotta go to the grocery store.

(cuts back to John in the car)
So after the U.S. failed to abide by the W.T.O.'s decision that U.S. cotton subsidies were illegal, Brazil's only real recourse was retaliation.

(cuts to John in another parking lot)
But if you're a small economy in a fight with a huge economy, your retaliation options are a little limited. Like, if Liberia doesn't like American cotton subsidies, they can say, "You know what? We're gonna tax all American imports to Liberia."

And then America will be like, "... Okay."

(cuts to John walking into the grocery store)
And that's probably how this fight with Brazil would have ended ten years ago, but what happened in the meantime is that Brazil became a BIG economy. Nowhere near the size of the U.S., certainly, but big.

(cuts to John out in the parking lot again)
Which is why, when Brazil threatened to tax American imports like pharmaceuticals and cosmetics, those companies called their friends in the American government and said, "Ya gotta do something about this cotton business!"

(cuts to John in his usual vlog-spot)
And they did come to an agreement! In April of 2010 the United States announced that it would pay Brazilian cotton farmers 147 million dollars a year in order to continue subsidizing our own cotton farmers illegally, to the tune of three billion dollars a year.

And that, Hank, is how the United States came to subsidize the Brazilian cotton industry. If we were gonna be fair, we should subsidize every cotton industry in the developing world, but Brazil was the only country that was smart enough to sue us and big enough to scare us. Like I said earlier, I love Brazil. But I don't want to send their cotton farmers 147 million dollars each year.

Hank, I'll see you on Wednesday.

By the way, Nerdfighters, the American taxpayer has already paid for a significant portion of this tee-shirt. If you'd like to pay for the rest of it, you can do so at dftba.com/pizza It's in stock, ships immediately, and thanks to bad economic policy-making, it's only $18.